Range Resources Corp. (RRC) reported fourth-quarter 2013 adjusted earnings of 24 cents a share, which lagged the Zacks Consensus Estimate of 26 cents. The results also decreased from the year-earlier adjusted profit of 46 cents a share.
Fourth quarter total revenue of $428.1 million lagged the Zacks Consensus Estimate of $464.0 million and decreased 6.5% year over year from approximately $458.0 million. The annualized decline is attributable to lower price realization.
Full year 2013 adjusted earnings were $1.45 per share, representing a 57.6% increase from 92 cents per share in full year 2012. The results also beat the Zacks Consensus Estimate of 83 cents.
Total revenue in 2013 increased 27.8% to $1,862.7 million from the 2012 level of $1,457.7 million.
Production
The company's fourth quarter production averaged a record 1,011.7 million cubic feet equivalent per day (MMcfe/d). Total production volume experienced a 19.8% improvement from the year-earlier period mainly on the back of continued success in its drilling program in the liquid-rich high return plays. In particular, liquids output jumped more than 35% from the year-ago period.
The fourth quarter average net production volumes of oil, natural gas liquids (NGLs) and natural gas were 11,221 barrels per day (BPD), 31,386 BPD and 756 MMcf per day, respectively. Natural gas made up 75% of total production, while the balance comprised NGL and crude oil.
Natural gas production expanded 15.4%, NGL rose 45% and oil production increased 13.8% on a year-over-year basis.
Full year 2013 total production of 939.8 MMcfe/d improved 24.9% from the 2012 level of 752.6 MMcfe/d.
Realized Prices
For the fourth quarter, Range's total price realization (including the effects of hedges and derivative settlements) averaged $4.07 per Mcfe, down 12.3% year over year. The overall price comprised NGL at $31.07 per barrel (down 26% year over year) and natural gas at $2.93 per Mcf (down 12.5%). However, crude oil was sold at $82.94 a barrel (up 0.8%).
Financials
At the end of the quarter, long-term debt was $3,140.5 million, representing a debt-to-capitalization ratio of 56.5% (versus 55.0% in the preceding quarter). During the fourth quarter, the company generated $252.5 million of adjusted cash flow, representing an increase of 1.9% from the prior-year quarter.
Total drilling expenditure for 2013 came in at $1.1 billion.
Guidance
For the first quarter of 2014, the company targets production growth of 20–25% year over year. Production is anticipated at 1.05 Bcfe per day, of which liquids is likely to comprise 30–35%.
For 2014, Range has set a capital spending budget of $1.52 billion, of which about 87% will be directed toward the Marcellus.
Zacks Rank
Range Resources currently retains a Zacks Rank #2 (Buy). Other stocks in the oil and gas industry like Helmerich & Payne, Inc. (HP), Matrix Service Company (MTRX) and Patterson-UTI Energy Inc. (PTEN), with a Zacks Rank #1 (Strong Buy) are also worth considering.
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